Importing your supplies from overseas can help you lower your production costs and increase your profit margins. Before you start though, you’ll need a carefully thought-out plan of action. This guide looks at the steps you’ll need to take to help ensure success.

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 Why import?

There may be a number of benefits attached to choosing a supplier from overseas. These include:

  • Lower-priced goods: Lower labour costs or a different tax set-up may mean the price you’ll pay in one country for a particular product, even with transport costs, is much lower than you’d pay in the UK.
  • Higher-quality finished products: Every country has its specialist skills and strengths. If you want to sell the best, it could make sense to import it.
  • Traditional skills: In some cultures, there are traditional crafts and skills that have been carried on for generations, and which would be hard to replicate elsewhere.
  • Original products and raw materials: Originality and authenticity are important in some markets if you want to keep ahead of your competitors.
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 Sourcing suppliers abroad

The key to making a success of importing often lies in choosing the right supplier to begin with. This means you’ll first need to do some research, but there are a number of sources that can help:

  • Trade representation in the UK: Many organisations with an interest in exporting to the UK have some sort of representation here. You may able to get details from the relevant foreign Chamber of Commerce, or the commercial department within a foreign embassy or consulate.
  • International trade exhibitions and fairs: These will be full of suppliers wanting to do business with UK businesses.
  • Your own trade associations: They will have links to companies in your market, so they can be a good place to get contacts and guidance. They may also be able to warn you about specific market issues.
  • Trade journals: They may carry details of exporters wanting to trade with the UK.
  • The Internet: This is another useful method of searching for suppliers, although you should take care to establish the authenticity of overseas businesses you locate online.
  • Overseas agents or exporters: An agent based in the country you want to import from can help speed up the process. They’ll also be able to guide you through the necessary procedures.
  • Check the merchandise: If the product you want to import is already available in the UK, there's nothing to stop you checking the country of origin markings. You can then get in touch with that country's consulate or Chamber of Commerce for information on agents and suppliers to contact.
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 Avoiding the pitfalls

Trading internationally may carry more risk than dealing with UK-based companies, where it’s easier to check creditworthiness and quality of goods. If you want to import successfully however, there are a number of issues you’ll need to take into account:

Supplier reliability

The reliability of your supplier is crucial if you’re to make importing a success. Find out as much as you can about them through your business contacts and consider asking for references from their bank or an international credit reference agency. There is also no substitute for visiting the company in person. 

Product liability

You may be held liable for any harm caused to individuals by goods you have imported. As a result, you may want to look into insurance to cover this.

Agree the total cost

With imports, it is essential to check that the price you’ve agreed includes everything from packaging and insurance, to delivery costs and import duties.

Go over the terms and conditions of your contract extremely carefully, to make sure that all costs are included.

Exchange rates

Fluctuating exchange rates can reduce your profitability, since they can affect the price of both imports and exports. So you should always make sure you know the impact that changing exchange rates could have on your profit margins and cash flow. One way to protect yourself is with a forward exchange contract. This is a binding obligation to buy or sell a certain amount of foreign currency at a pre-agreed rate of exchange, on or before a certain date. It lets you budget at a guaranteed rate of exchange.

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 When you’re going ahead with an order

What a purchase order should contain

Typically, your order should include:

  • The agreed price of the goods requested
  • The quantity ordered
  • The quality required
  • The delivery schedule, terms and costs
  • How the goods will be packaged for shipping
  • Payment terms
  • Insurance.

Your legal adviser, or trade association, should be able to give you advice on typical terms and conditions for your specific industry.

Test the water

It may be worth ordering only a small quantity from a new supplier to begin with. That way you can find out more about your supplier's efficiency and reliability, how easy they are to deal with, and the quality of their product.

Overcoming language barriers

When ordering from abroad, double check that your supplier has understood exactly what your requirements are. If your first languages are not the same, there could be room for misunderstanding. Think about whether a translator might help ensure that what's been agreed is clearly understood by all parties.

Allow plenty of time

Take into account the extra time it could take for an order to reach you from overseas. You’ll need to factor that into the delivery times you give to your customers. The shipping time could be longer and there could be delays with goods being cleared through customs.

International payments

How you choose to pay your suppliers depends on a number of factors, not least the level of trust between you.

Open account – Here, the supplier trusts your ability to pay them against their invoice within, say, 30 days. Clearing banks offer fast money electronic transfer systems for these kinds of transactions. Or you could open a euro currency account allowing you to trade with countries in the Eurozone using just one account.

Letters of credit - These offer both buyer and seller extra security and they are honoured through the banking system. The conditions of sale are stated on the letter of credit, including the amount to be paid, a description of the goods and what documents the exporter must present to receive payment. The importer's bank then ensures payment is made if those conditions are met.

Documentary collections - Documents relating to the goods to be imported are sent by the supplier through their bank, to your bank. Your bank takes receipt of all the shipping documents and invoices, which will state the method of payment. Your bank then notifies you when it has all the documents. The advantage of this option is that you, as the importer, don't have to make payment for the goods until you have accepted the documents relating to them from your bank.

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 Paperwork and legal matters

Import licences and quotas

Many countries will try to limit the quantity of certain goods being exported from their country. If the government’s quota has already been reached, you won't be able to import that particular product. This process is normally regulated by the issue of import and export licences.


The EU allows unrestricted movement of the majority of goods between its members, although you may still need an import licence. For goods imported from outside the EU, the rate of duty is decided by how the goods are classified. For help with Tariff Classification, call the Tariff Classification helpline on 01702 366077.

Import VAT

Import VAT is levied on the value of the goods at the standard rate, plus any related costs including duty, freight and insurance. Companies importing regularly are sometimes advised to obtain a deferment account. Your local HM Revenue & Customs guidance centre can offer further help on this.

Product safety and marking

UK law states that you must make sure any products you import are safe and comply with the relevant product standards. They may need to be tested in an accredited laboratory. For more information about marking and standards of safety for particular products, speak to your local trading standards officers.

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 Transporting goods

Terms of delivery and transport method

Some suppliers will quote for their goods including the transport or freight charges, but you may want to take responsibility for your goods earlier in the process. This allows you to choose the carrier, the delivery route and the point of entry into the UK. It’s always advisable to inspect your goods as soon as you receive them.

Cargo insurance

Arranging this insurance yourself allows you to determine the level and extent of cover. For example, the goods might only be covered by the exporter until they reach a UK port, whereas you might want them to be covered all the way to the warehouse gates. It also means that, if there's a problem, you are dealing with a UK-based company that speaks your language.

Transport terminology

There is a set of common terms that are used by most international suppliers, shippers, insurance brokers and agents in their documentation. These are referred to as international commercial terms (INCOTERMS).

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 Where to go for advice

HMRC Business Guidance

Explore quick and accessible content via webinar’s, e-learning tools and videos. If you would like content from HMRC.

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